Instead, management can decide what types of information it prefers to see, which information to ignore, and how the results are to be formatted and distributed for its consumption. The reports of a costing system are intended for internal use, and so are not subject to the reporting requirements of any of the accounting frameworks, such as GAAP or IFRS. Matching actual costs incurred against budgeted cost levels for control purposesĬreating strategic and tactical plans for future operations
The information issued by a costing system is used by management for a variety of purposes, including:įine-tuning operations to generate higher profitabilityĭeciding where to cut costs in the event of a business downturn The areas reported upon can be any part of a company, including its customers, departments, facilities, processes, products and services, research and development, and sales regions. The system is comprised of a set of forms, processes, controls, and reports that are designed to aggregate and report to management about revenues, costs, and profitability. A costing system is designed to monitor the costs incurred by a business.
